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OFFICE OF THE PROTECTIVE COMMISSIONER

ADMINISTRATION FUND

FINANCIAL REPORT

FOR THE YEAR ENDED 30 June 2009

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OFFICE OF THE PROTECTIVE COMMISSIONERADMINISTRATION FUND

Contents

Statement in accordance with Section 41C Public Finance and Audit Act 1983 2

Income Statement for the year ended 30 June 2009 3

Balance Sheet as at 30 June 2009 4

Statement of Recognised Income and Expense for the year ended 30 June 2009 5

Cash Flow Statement for the year ended 30 June 2009 6

Notes to the Financial Statements for the year ended 30 June 2009

1. Authorisation Date 7

2. Summary of Significant Accounting Policies 7

3. Fees 12

4. Other Operating Expenses 12

5. Cash and Cash Equivalents 13

6. Receivables 13

7. Other Assets 14

8. Intangibles 14

9. Plant and Equipment 15

10. Payables 15

11. Provision for Personnel Services 16

12. Accumulated Funds 16

13. Lease and Other Commitments 16

14. Financial Instruments 17

15. Contingent Liabilities 19

16. Common Fund Assets...……………………………………………………………………………. 20

17. Subsequent Events…….……………………………………………………………………………..20

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STATEMENT IN ACCORDANCE WITHSECTION 41C PUBLIC FINANCE AND AUDIT ACT 1983

Pursuant to Section 41C of the Public Finance and Audit Act 1983, I declare that in my opinion:

a). The accompanying Financial Report exhibits a true and fair view of the financial position and transactions for the year ended 30 June 2009;

b).The Financial Report has been prepared in accordance with the provisions of the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2005 and the Treasurer’s Directions; and

c). I am not aware of any circumstances, which would render any particulars included in the Financial Report to be misleading or inaccurate.

Imelda DoddsPROTECTIVE COMMISSIONER & PUBLIC GUARDIAN

Dated: 20 October 2009

START OF AUDITED FINANCIAL STATEMENTS

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Income Statement for the year ended 30 June 2009

The accompanying notes form part of these Financial Statements.

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Balance Sheet as at 30 June 2009

The accompanying notes form part of these Financial Statements.

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Statement of Recognised Income and Expense

for the year ended 30 June 2009

The accompanying notes form part of these financial statements.

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Cash Flow Statement for the year ended 30 June 2009

The accompanying notes form part of these financial statements.

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Notes to the Financial Statements for the year ended 30 June 2009

1. Authorisation Date

The financial report of the Office of the Protective Commissioner-Administration Fund (Administration Fund) for the year ended 30 June 2009 was authorised for issue by Imelda Dodds, the Protective Commissioner and Public Guardian on 20 October 2009 pursuant to Section 41C(1B) of the Public Finance and Audit Act 1983.

2. Summary of Significant Accounting Policies

(a) The Reporting EntityThe Office of the Protective Commissioner (OPC), as a reporting entity, comprises all the operating activities under the control of the Protective Commissioner and Public Guardian. It is a controlled entity of the Attorney General's Department. The operations of the Administration Fund are included in the consolidated Financial Statements of the Attorney General’s Department.

The Administration Fund is deemed to be a not-for-profit entity as profit is not its principal objective.

(b) Basis of PreparationThe financial report is a general purpose financial report and has been prepared in accordance with applicable Australian Accounting Standards including Australian Accounting Interpretations, the requirements of the Public Finance & Audit Act 1983 and Public Finance and Audit Regulation, and the Treasurer’s Directions.

Except for certain assets and liabilities which are measured at fair value as noted, the financial report has been prepared in accordance with the historical cost convention. All amounts are rounded to the nearest one thousand dollars and are expressed in Australian dollars.

(c) Statement of ComplianceThe financial report complies with the Australian Accounting Standards which include Australian equivalents to International Financial Reporting Standards (AIFRS).

At the reporting date, a number of Accounting Standards/Interpretations adopted by the AASB had been issued but are not yet operative and have not been early adopted by the Administration Fund. The following is a list of these standards/interpretations:

AASB 101, AASB 2007-8 and AASB 2007-10 regarding amendments to presentation of financial statements.

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OFFICE OF THE PROTECTIVE COMMISSIONER – ADMINISTRATION FUNDNOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2009 (continued)______________________________________________________________________________

2. Summary of Significant Accounting Policies (continued)

(c) Statement of Compliance (continued)

AASB 2008-9 regarding AASB1049 amendments consistent with AASB 101.

AASB 2008-13 and Interpretation 17 regarding distribution of non cash assets to owners

Interpretation 18 regarding transfer of assets from customers. AASB 2009-2 regarding financial instrument disclosures.

(d) Revenue RecognitionAmounts disclosed as revenue where applicable are net of returns, allowances, duties and taxes. Revenue is recognised for each of the OPC’s major activities as follows:

i) Common Fund transfersTransfers from the Common Fund for the Investment Fee are recognised as revenue in the period in which they are determined by the Protective Commissioner.

ii) NSW Government contributionsThe budget contribution from the Government of NSW is recognised as revenue on receipt.

iii) Transfers under Section 57 of the Protected Estates Act 1983Transfers of this type are recognised in the period in which they are determined by the Protective Commissioner.

iv) FeesFees from clients are recognised on an accrual basis, when service is

provided.

The OPC charges a percentage value of the total value of chargeable assets in a client’s estate for the financial management of that estate.

Fees include management fees, investment fees, and other fees while retaining the Protective Commissioner's power to recover additional costs incurred by the Commissioner, where applicable, from the Common Fund.

v) Asset salesThe revenue on the sale of assets is recognised in the period in which the contract for sale occurs.

vi) Interest incomeInterest income is recognised as it accrues. Interest income is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.

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(e) Personnel Services

i) ExpensesThe Attorney General’s Department provides personnel services to the OPC. Personnel services expenses include salaries and wages and related costs for these services.

ii) LiabilitiesThis comprises the OPC’s liability to the Attorney General’s Department for costs arising from services rendered by the Attorney General’s Department to balance date. This also includes superannuation for personnel services provided by the Attorney General’s Department.

Costs payable within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs.

(f) DepreciationDepreciation is provided for on a straight-line basis over the estimated useful life of the asset to the entity. All material separately identifiable component assets are recognised and depreciated over their shorter useful lives.

The depreciation rates used for each class of assets are as follows:- Computer equipment 33.33% Plant and equipment 10% Leasehold improvements and office refurbishment 10– 20%

Leasehold improvements are amortised over the unexpired period of the lease or the estimated useful life of the asset, whichever is shorter.

(g) Goods and Services TaxRevenues, expenses and assets are recognised net of goods and services tax (GST), except where: the GST incurred by the agency as a purchaser that is not recoverable

from the Australian Taxation Office is recognised as part of the cost of acquisition of an asset or as part of an item of expense;

receivables and payables are stated with the amount of GST included; and the net amount of GST receivable from or payable to the Australian

Taxation Office is reported as current asset or liability in the Balance Sheet.

Cash flows are recognised on a gross basis in the Cash Flow Statement. GST receivable from or payable to the Australian Taxation Office relating to cash flows from investing and financing activities are classified as operating cash flows.

(h) Cash and Cash Equivalents

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OFFICE OF THE PROTECTIVE COMMISSIONER – ADMINISTRATION FUNDNOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2009 (continued)______________________________________________________________________________Cash and cash equivalents comprise cash on hand and cash in banks and investments in short term money market instruments.

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(i) Financial Assets and Financial LiabilitiesFinancial instruments give rise to positions that are either a financial asset or a financial liability of the Administration Fund and a financial liability (or equity instrument) or a financial asset of the other party. For the Administration Fund these include cash at bank, receivables and payables.

In accordance with AASB 7 Financial Instruments: Disclosures, information is disclosed in Note 13 in respect of the credit risk and interest rate risk of financial instruments.

All such amounts are carried in the accounts at net fair value unless otherwise stated.

(j) ReceivablesReceivables are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for impairment. Receivables are reviewed on an ongoing basis and debts which are known to be uncollectible are written off. An allowance for impairment is made when collection of the full amount is no longer considered probable.

Debtors are required to be settled within thirty days.

(k) Impairment of AssetsIf there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off by a charge to the Income Statement.

The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell.

(l) Intangible AssetsIntangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are recognised at cost.

Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the OPC.

Intangible assets with finite useful lives are amortised on a straight-line basis over the asset’s useful life. The useful life of intangible assets is three years.

Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each annual reporting period.

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OFFICE OF THE PROTECTIVE COMMISSIONER – ADMINISTRATION FUNDNOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2009 (continued)______________________________________________________________________________An assessment is made at each reporting date to determine whether there are indicators that the intangible asset concerned is impaired. If so, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount.


(m) Other AssetsOther assets including prepayments are recognised on a cost basis.

(n) Acquisitions of AssetsThe cost method of accounting is used for the initial recording of all acquisitions of assets controlled by the OPC. Cost is determined as the fair value of the assets given as consideration plus the costs incidental to the acquisition.

Assets acquired at no cost, or nominal consideration, are initially recognised as assets and revenues at their fair value at the date of acquisition.

(o) Non-current Physical Assets Plant and equipment are measured at cost less accumulated depreciation and impairment which is considered to equal fair value.

This is considered an appropriate methodology for the OPC’s non-specialised, non-current physical assets as they have short useful lives.

Individual items of plant, equipment, furniture and fittings and software costing $3,000 and above and computer hardware costing $1,000 and above with an estimated useful life to the entity in excess of 12 months are capitalised.

(p) Leased AssetsOperating lease payments are charged to the Income Statement in the periods in which they are incurred.

(q) PayablesPayables represent liabilities for goods and services provided to the OPC. They are recognised initially at fair value usually based on the transaction cost or face value.

Short term payables with no stated interest rate are measured at the original invoice amount where the effective discounting is immaterial. They are unsecured and usually paid within 30 days of recognition.

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OFFICE OF THE PROTECTIVE COMMISSIONER – ADMINISTRATION FUNDNOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2009 (continued)______________________________________________________________________________3. Fees

4 (a) Other Operating Expenses

4 (b) Loss on disposal of assets

Assets with net book value of $13,584 and having no useful life were disposed during the year.

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5. Cash and Cash Equivalents

For the purpose of the Cash Flow Statement, cash and cash equivalents include cash on hand and deposits at call with Westpac and other financial institutions.

Reconciliation of Surplus/(Deficit) for the year to Net Cash Provided by Operating Activities

Refer to Note 14 for details regarding interest rate risk, credit risk and other risks arising from financial instruments.

6. Receivables

Details regarding interest rate risk, credit risk and other risks are disclosed in Note 14.

7. Other Assets14


Non-current

8. Intangibles

A reconciliation of the carrying amount of each class of intangibles at the beginning and end of the current reporting period is set out below.

9. Plant and Equipment

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A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of the current reporting period is set out below.

10. Payables

This relates to accrued cost of goods and services provided to OPC.

11. Provision for Personnel ServicesThis relates to accrued salaries and wages, recreation leave, long service leave and superannuation for personnel services provided by the Attorney General’s department.

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(a) Current

(b) Non-current

12. Accumulated Funds

13. Lease and Other Commitments Commitments mainly attributable to non-cancellable operating leases.

Operating lease commitments relate to leases currently held in relation to the occupancy of premises by the OPC and the Office of the Public Guardian in Parramatta, Sydney and regional offices. They also include operating leases of motor vehicles.

14. Financial Instruments

(a) Interest Rate RiskInterest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates. The Administration

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OFFICE OF THE PROTECTIVE COMMISSIONER – ADMINISTRATION FUNDNOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2009 (continued)______________________________________________________________________________Fund’s exposure to interest rate risks and the effective interest rates of financial assets and liabilities are as follows:

2008

Floating Interest Rate

$'000

Non-Interest Bearing

$'000

Total carryingAmount

$'000

Weighted Average Effective

Interest Rate %

Financial assetsCash - current account 3,982 2 3,984 6.91

Deposits - 11a.m. account 17,358 0 17,358 6.77

Receivables 0 2,456 2,456 n/a

Total financial assets 21,340 2,458 23,798

Financial liabilitiesPayables 0 2,607 2,607 n/a

Total financial liabilities 0 2,607 2,607 Net financial assets/ (financial liabilities) 21,340 (149) 21,191

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14. Financial Instruments (continued)

(a) Interest Rate Risk (continued)

The effect on operating performance and equity due to a reasonably possible change in interest rate of +/- 1% is outlined below.

(b) Credit RiskCredit risk is the risk of financial loss arising from another party to a contract/or financial position failing to discharge a financial obligation there under. The Administration Fund's maximum exposure to credit risk is represented by the carrying amounts of the financial assets included in the Balance Sheet.

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14. Financial Instruments (continued)

(b ) Credit Risk (continued)

The Administration Fund is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors. There are no debtors which are currently not past due or impaired whose terms have been negotiated.

(c) Other RisksExposure to currency risk, price risk and liquidity risk is considered to be minimal.

(d) Net Fair ValueThe net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities approximates their carrying value.

15. Contingent Liabilities

Legal MattersThe OPC may bear a cost risk of some proceedings which have been concluded on behalf of clients due to adverse verdicts or other court orders. The total estimated cost to OPC is approximately $120,000 which will be recovered by the Treasury Managed Funds.

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16. Common Fund Assets

The OPC manages the assets of clients under the Protected Estates Act 1983. These assets are not included in the Administration Fund, but are separately reported in the financial report of the Office of the Protective Commissioner – Common Fund. Details are summarised below:

The carrying value of assets external to the OPC Common Fund are not audited and are based on a number of different valuation bases, including historical cost and market value. The Fund also administers assets which are carried at nil value, the fair value of which is not known.

17. Subsequent Events

i) As part of the 2008/09 New South Wales Mini Budget, the State Government announced the merger of the OPC and the NSW Public Trustee. Following the announcement, the NSW Trustee and Guardian Bill 2009 was passed in Parliament. Royal Assent was granted on 26 June 2009.

The new entity, New South Wales Trustee and Guardian, will commence on 1 July 2009.

ii) On 27 July 2009, the Public Sector Employment and Management (Departmental Amalgamations) Order 2009 was made with retrospective effect from 1 July 2009. The Order provides for the legal establishment of the 13 new Departments in the NSW Government Structure. It abolishes the Attorney General’s Department and creates the Department of Justice and Attorney General.

END OF AUDITED FINANCIAL STATEMENTS

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(Word 1851.3kb)

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